Pennsylvania's Prediction Market Bill Takes the No-Tax Route Other States Have Refused

Pennsylvania has introduced legislation that would create a dedicated regulatory framework for prediction markets while taking the rare step of not imposing any tax on operator revenue. House Bill 2711, introduced on July 22 2026 by Representative Tarik Khan with more than two dozen co-sponsors, separates Pennsylvania from the majority of states that have either banned prediction markets outright or moved to tax them as a new gambling revenue source.

Updated July 2026

• Bill: House Bill 2711, introduced July 22 2026
• Sponsor: Rep. Tarik Khan (D-PA) with 24-plus co-sponsors
• Tax on prediction market revenue: none
• Minimum participation age: 21
• Maximum daily fine for continued violations post-injunction: $1 million
• Enforcement body: Pennsylvania Attorney General and local district attorneys
• Notable prohibitions: high school sports contracts, minor participants, health-status markets, insider trading, death markets

What does Pennsylvania House Bill 2711 actually propose?

HB 2711 would establish a set of operating rules for prediction market platforms that allow users to trade contracts on the outcome of real-world events, including sporting contests. The bill allows sports event contracts and most other prediction market categories while creating specific prohibitions and consumer protections that distinguish the framework from the regulation of traditional sports betting.

Crucially, the bill does not classify prediction markets as gambling under Pennsylvania law. Instead, it treats them as a distinct financial market product requiring oversight rather than a tax-generating gaming activity. That classification is consequential: it means prediction market operators would not face the licensing and gaming duty obligations that apply to casino and sportsbook operators in the state.

How does HB 2711 differ from other states' approaches?

State	Approach	Tax Rate
Pennsylvania (HB 2711)	Regulatory framework, no prohibition	None
Minnesota	Outright ban	N/A
Kentucky	Framework with taxation	14.25% combined rate
Illinois	Sports-specific taxation framework	Variable
North Carolina	Permitted with tax	6%
Tennessee	Criminal penalties for outcome manipulation	Not specified

Pennsylvania's no-tax position stands in sharp contrast to other states that have treated the prediction market sector as a new gambling revenue opportunity. If the bill passes, it could make Pennsylvania the most favourable major-state jurisdiction for prediction market platforms seeking to operate legally in the United States, potentially accelerating adoption among consumers and operators alike.

What consumer protections does the bill include?

HB 2711 requires prediction market operators to exclude users who appear on self-exclusion registries, employees of the operators themselves, and individuals who possess material nonpublic information about the events being traded. That last requirement is the insider trading guardrail that distinguishes the Pennsylvania bill from more permissive approaches and brings it closer to the regulatory standards applied to financial securities markets.

The bill bans contracts based on the outcome of high school sporting events, any event involving minor participants, individual health status, and death markets, which are contracts that pay out on the death of a specific named person. Operators must also implement fraud detection systems and market manipulation prevention controls adequate to protect the integrity of the contracts they offer.

How would Pennsylvania enforce the new rules?

Enforcement authority sits with the Pennsylvania Attorney General and local district attorneys, who can pursue civil remedies and injunctions against non-compliant operators. The penalty structure is aggressive: operators who continue to violate the rules after a court injunction faces fines of up to $1 million per day of continued non-compliance. That is a meaningful deterrent even for well-capitalised prediction market platforms.

The decision to vest enforcement in the AG's office rather than a dedicated gaming regulator such as the Pennsylvania Gaming Control Board reflects the bill's framing of prediction markets as financial activity rather than gambling, a distinction that proponents argue should insulate the sector from the heavier compliance costs that licensed gaming operators bear.

What does the bill mean for major prediction market platforms?

Platforms navigating a patchwork of state-level legal challenges in recent months would have a clearer operating path in Pennsylvania if HB 2711 becomes law. After a Washington judge blocked Kalshi prediction markets and France blocked Polymarket via the ANJ, the sector is actively seeking jurisdictions that provide legal certainty. Pennsylvania online gambling revenue already tops its land-based casino floors, suggesting the state's consumers are comfortable with digital wagering products, which makes the prediction market market size here potentially significant.

Pennsylvania's approach, if it survives the legislative process, could become a template for other states that want to attract prediction market activity without surrendering gambling tax revenue they have never collected from an industry that did not previously exist in a regulated form.

What are the objections likely to be?

Opposition is likely to come from two directions. Traditional sports betting operators, who pay significant licensing fees and tax rates in Pennsylvania, may argue that allowing a competing product to operate without equivalent fiscal burdens creates an uneven playing field. State budget advocates may contend that forgoing a tax on a new and growing revenue base is a missed opportunity, particularly given that the US prediction market sector is on a trajectory toward trillions of dollars in contract volume by 2030 according to market analysts.

Health advocates may also raise concerns. Prediction markets that allow sports event contracts produce high-frequency wagering behaviour with some of the same characteristics that have drawn scrutiny to live in-play sports betting, and the bill's consumer protection provisions may come under pressure to go further before it can pass.

Full bill details and sponsor information are available via the Gambling Insider report on HB 2711.

Frequently Asked Questions

What is Pennsylvania House Bill 2711?

HB 2711 is a bill introduced on July 22 2026 by Rep. Tarik Khan that would create a regulatory framework for prediction market platforms in Pennsylvania. It permits sports event contracts, bans certain categories of contracts including death markets and high school sports, and imposes no tax on operator revenue.

Does Pennsylvania's prediction market bill include a tax?

No. Unlike Kentucky, Illinois, and North Carolina, HB 2711 does not impose any tax on prediction market operator revenue, treating the sector as a financial market product rather than a gambling activity.

What is the minimum age to use prediction markets under HB 2711?

The bill sets a minimum participation age of 21, the same threshold used for casino gambling and sports betting in Pennsylvania.

What contracts are banned under HB 2711?

The bill prohibits contracts based on high school sporting events, events involving minor participants, individual health status, and the death of a specific person.

Who enforces HB 2711?

The Pennsylvania Attorney General and local district attorneys are responsible for enforcement, with civil remedies, injunctions, and fines of up to $1 million per day for continued violations available as penalties.